Retail Report: Easing the Distribution Path

The sheer explosion in the number of brands you see at a grocery store today is mind-blowing.

At least 10 different spice brands, including a few regional players, jostle for attention in the masala shelf. Some seven juice brands, including two start-ups, catch the eye. From rice to sauces to pickles to soaps, every category has multiple selections.

If the customer is confused, so is the tiny kirana store owner. What to stock, how much and where to get it from? Of course, there is the age-old wholesale/distributor route. Look at the catalogues brought by the sales agent and place orders and wait for it to be delivered at the doorstep. But today, the kirana store owner (at least in some cities) also has the option of visiting hypermarkets like Metro Cash n Carry and Lots, or leveraging e-commerce marketplaces like Udaan and Ninjacart, earning higher discounts, incentives and rewards.

On the other hand, the old-world distributor gives the store owner credit.

With the kirana store retailer now having multiple avenues of sourcing and getting savvy about where he can earn maximum margins, offline distributors have no option but to up their game. Gone are the days when they could bank on decades-old personal relationship.

For brands, there is the additional important challenge of catching the eye of the kirana retailer. After all, in India’s $350-billion grocery market, over 90 per cent of sales come through the nearly 15 million kiranas dotting the country. Not surprisingly, all over the country, foot soldiers from FMCG companies trudge over to kirana stores weekly or bi-weekly to ensure their products are on the shelves, check how they are moving, as well as map the competition. This is where Software as a Service (SaaS)-based sales automation apps like FieldAssist and Bizom come into play — helping distributors and brand managers optimise these field visits by their sales agents, capture valuable data that will help them come up with new schemes almost instantaneously.

Instant reports

For Paramdeep Singh, co-founder and CEO of FieldAssist, making the app was, in a way, solving all the problems he faced in his own journey as a manufacturer. The mechanical engineering graduate from VIT had jumped headlong into the food and beverage space through his first start-up, Param Health Foods. He manufactured healthy juices out of a unit in Punjab. “I knew the supply-chain challenges faced by young start-up FMCG companies and the pain points of distribution,” says Singh.

In 2013, Singh sold his manufacturing company and, along with three IIT Dhanbad alumni, began working a tech product to bring efficiency to the sales process.

Typically, field agents have fixed routes and number of stores to cover in a week and have to generate daily sales reports. “This daily report would invariably become weekly by the time it reached the manager sitting in another city,” points out Singh.

With the mobile app, the reports are instantaneous and capture a lot of business intelligence, including on rival brands as well as customer preferences. It enables the manager to take quick decisions on adding stock or changing the product mix, introduce schemes to induce consumer interest in a low-moving product, and so on. Such instantaneous reports are necessary as Nielsen research shows that 60 per cent of FMCG sales in India are influenced at the store level. Brands have to make sure they are frequently servicing the store, making sure the right product assortment is present and the visibility is good. While big corporations like Hindustan Unilever and ITC have the logistics to do this, for young and mid-sized companies it can be a challenge. This is where a wave of distribution start-ups are helping.

Quick decision-making

VS Kannan Sitaram, Venture Partner at Fireside Ventures, which has invested in a Hyderabad-based distribution company called AnKa SumMor, describes how the plug-and play service is easing the pain for emerging brands, giving them the same strengths that large FMCG companies enjoy. “It is reducing the complexity in distribution,” he says, pointing out how typically, a mid-sized biscuit company would have seven or eight distributors to service a city. But now that they are armed with tech tools, one distributor can easily cover the city. Earlier, distributors would collect information telephonically and manually write reports that would be collated by the sales manager — today there are unified information collection systems. Apps like Bizom and FieldAssist help simplify sales planning and stock planning, thereby increasing efficiency and cutting costs.

Now, in real time, a brand manager can see which product is doing well, which is not doing too well, which sales territory is performing better and, based on that information, take decisions to rotate stocks.

According to Paramdeep Singh, most of the companies that have taken the sales automation app report a 15 to 25 per cent increase in productivity of their sales agents. Both Bizom and Field Assist have a machine learning-enabled route planning map for field agents. The app uses GPS to allocate best routes that will ensure maximum outlet coverage in minimum time by the agents.

A key part of the sales agent’s job, says Singh, is also to educate the store owner on the product. Given the speed at which new products/varieties (a cosmetic brand can have some 600 SKUs) are being brought out, for brands, training the sales agent quickly enough becomes a challenge. The app saves time as a digital catalogue is fed into it. Digital catalogues enable a retailer to take a buy decision even before the field agent makes the trip, and the app can capture these advance orders.

With Retail 3.0 — Future Group’s experiment of small-format stores like EasyDay or Nilgiris for last-mile delivery to consumers — the spotlight is again back on the kirana. Future Group’s bet is on using data to customise each store. Some modern trade retailers are also trying to sell their private labels through kirana stores. When modern trade started growing in India, it was thought that the wholesaler or distributor and the multi-tiered intermediation layer would be eliminated. But the digital-driven distributor is only gaining in strength.

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